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The basic reason is that I see no reason to engage in a morally dubious practice when it doesn't even yield any pragmatic benefits. For example, if I take the wheel of a runaway bus, and I can swerve to kill 3 people instead of the 30 in the path of the bus, then maybe I go ahead and do it. Sure, I feel bad about killing 3 people who otherwise would have lived, but I understandably could "pick the lesser of two evils."

Yet that's not what happens if you vote for someone you think will violate property rights and order the deaths of innocent foreigners. Here, your vote is not reducing the number of people killed (unlike in the bus story). Whether or not you vote for the "lesser evil," the same person will become president and will go about doing a whole bunch of evil. So there is no practical reason for you to join in, and thus you might as well save yourself the inconvenience of waiting in line at the polling booth.

I deal with the obvious retorts here.

A remorseful Dr. Frankenstein speaking to Captain Walton about the monster he (Frankenstein) created and released "You seek for unlimited power, as I once did; and I ardently hope that the gratification of your wishes may not be a serpent to sting you, as mine has been." (quote from Mary Shelley's Frankenstein, paraphrased)

It's election eve and Hannity and the other Republican talking heads have finally awakened to the outstretched arms of monster they created - the imperial president qua emperor.

Ironically, it was not that many months ago that Hannity and others cheered the increased power being consolidated in the White House. Now that monster is about to turn on them.

Note: I also fear the beast, no matter which brain is used.

As noted on the LRC blog, Professor Hoppe delivered an address to the Oxford Libertarian Society on October 23, 2008. The talk is available at the blog entry, and also here (29M).

As noted there, Hoppe spoke on the subject, "What is Exploitaiton? Who Exploits Whom?". "Professor Hoppe argued that Marxist class-analysis was essentially true in its nominal conclusions, but that fundamental misunderstanding of the nature of exploitative activities had produced the correct conclusions by faulty reasoning, causing them to be misapplied to voluntary free-market exchange. Marxism is correct, however, in recognising the exploitative character of the state, which prospers only by expropriating legitimate property owners and interfering in private exchange. The state is exploitative, then, in that every act of the state cannot occur without making some people - the taxpayer, the conscript &c - worse off, contrary to the mutual benefit of both parties in voluntary exchange."

Here's a great quote from the talk: "There is, of course, some truth in the statement that there's a difference between criminals and states. But the difference is actually one that makes states look even worse than plain criminals." Hoppe's example of the private mugger who can be reasoned with--who agrees to give his victim back a bit of the money so he can go have a beer--is priceless (at about 18:30).

In Bessen & Meurer latest patent study ("Do patents perform like property?," Academy of Management Perspectives, pp. 8-20 (August 2008)), the authors conclude: "intellectual property rights have at best only a weak and indirect effect on economic growth" and "The direct comparison of estimated net incentives suggests that for public firms in most industries today, patents may actually discourage investment in innovation."

The entire conclusion is below. See also Keith Sawyer's post, Do Patents Increase Innovation?, who note: "In 1999, for example, the total profits from patents in all U.S. public firms (excluding pharma) was about $3 billion, but their litigation costs associated with those patents were a whopping $12 billion!"

Two articles today are advancing the idea that bubbles are caused by a confluence of factors psychological, ethical, biological, and monetary. The first is from Forbes's Tim Hartford who cites research on male testosterone: "Profitable trading days boost testosterone levels and tend to encourage more risk-taking, more wins and more testosterone. When the risks didn't pay off, the testosterone ebbed away to be replaced by a stress hormone, cortisol. The whole process seems likely to exaggerate peaks and troughs." Another theory involves speculation about periodic mass hysterias. A final consideration that he mentions: "the Federal Reserve's policy of cheap money, and Fannie and Freddie's enormous appetite for junk mortgages."

But what overall impression does the reader gain from this? How can we weigh the relationship between these various inputs? We come away with a sense that we really don't know for sure what went wrong--it could be many things working together in some strange mix--and therefore we don't really don't for sure what to do about fixing the problem for the future.

Along the same lines is Max Borders's article up at FEE today. The strength of the article is showing how the state can't really do anything to fix a problem of this magnitude once it comes about. Its weakness is in its apparently agnosticism concerning the foundational cause of the bubble ("a confluence of events") and the financial meltdown the came after it popped. He blames not only government policy but also "willfully ignorant bankers, big shot risk-modelers, and people believing they could live beyond their means." He even seems to exempt Greenspan from responsibility: "Given the size of that task, he did pretty well for many years."

When people cite a range of factors without zeroing in on a single one, and refuse to weight their relative significance, Roger Garrison likes to use the necessary and sufficient test to show that an artificially inflated credit supply is the one factor that provides the explanation. Mark Thornton puts it another way. He points out that every financial crisis is characterized by a wide range of seemingly causal agents, but the one feature that they all have in common is an inflated money supply. It is this that the Austrian theory (Ron Paul suggests that it be called the Austrian explanation!) identifies as the core of the issue.

It should be evident that the law of marginal utility should be accorded just that epistemological status: a law. As Rothbard explains (and as Carl Menger and others showed before him), this theorem, which can be deduced from the action axiom, is more than merely empirically demonstrable: it is irrefutably true. FULL ARTICLE

There's nothing special about 50% plus one, writes David Heleniak.Truth and justice cannot be determined by a show of hands. We are not the government. Voting is not a sacrament. And as it stands today, when we're only given a choice between two Establishment-approved candidates, voting is a joke. FULL ARTICLE

I hope you enjoy this debate over 100% reserves.

It's fantastic that Chad Parish dug up this old 1983 video of Rothbard speaking about American banking history at a Mises Institute conference.

At least that is the message of this NYT article. The one saving grace of the current economic moment--downward pressure on prices due to unsold inventories and the non-entry of new money into circulation--these people decide is the very core of the problem and a trend that must be smashed no matter what. We once marveled that the New Dealers could have been so confused as to believe that low prices were a problem that needed to be solved rather than the best part of the downturn. But here we have a "consensus"-style article that says exactly this.

The Mystery of Banking, by Murray Rothbard - Upload a Document to Scribd

I don't know what it is about the Nobel Prize that makes economists fall in love with John Maynard Keynes, but once again I see a Nobel winner trying to convince us that the Keynesian package is sound economics. This time it is Joe Stiglitz throwing idiocy at us in the name of economic authority.

While most of his article is pretty bad, he manages to outdo himself here:

During the Great Depression, similar arguments were heard: government need not do anything, because markets would restore the economy to full employment in the long run. But, as John Maynard Keynes famously put it, in the long run we are all dead.

Markets are not self-correcting in the relevant time frame. No government can sit
idly by as a country goes into recession or depression, even when caused by the excessive greed of bankers or misjudgment of risks by security markets and rating agencies. But if governments are going to pay the economy's hospital bills, they must act to make it less likely that hospitalization will be needed. The right's deregulation mantra was simply wrong, and we are now paying the price. And the price tag--in terms of lost output--will be high, perhaps more than $1.5 trillion in the United States alone.

The right often traces its intellectual parentage to Adam Smith, but while Smith
recognized the power of markets, he also recognized their limits. Even in his era,
businesses found that they could increase profits more easily by conspiring to raise prices than by producing innovative products more efficiently. There is a need for strong anti-trust laws.

This is most interesting. We are hearing the need for another "New Deal," but the New Deal was all about the government creating cartels and limiting output. But, now we have Stiglitz telling us that the trouble is those damned markets and not enough anti-trust.

Oh, like his good friend and partner-in-crime Paul Krugman, Stiglitz rewrites the history of the Great Depression. The problem was that the markets did not correct because the government blocked both the correction and the recovery. But, being a Nobel winner means one does not have to stick with the truth when fabrications will do just fine.

When I saw the title of this Cato podcast--"Intellectual Property Versus Reason" (October 20, 2008)--I was hopeful and interested. Then I noticed it's an interview with the Nobel-winning, er, physicist Robert B. Laughlin, author of the new book, The Crime of Reason and the Closing of the Scientific Mind. Physicists and engineers are notoriously scientistic (see Yet More on Galambos; also Galambos and Other Nuts, Libertarian Activism--comments and C.P. Snow's "The Two Cultures" and Misesian Dualism). But, still, the title implied Laughlin thinks IP is, well, unreasonable (Cato scholars' IP positions seem to be mixed and largely utilitarian).

As I listened to the 16-minute podcast, I had a succession of impressions. For the first 6 or so minutes, I could not tell whether Laughlin was pro- or anti-IP. I know a bit about IP but I was not even sure what he was talking about much of the time. Oh, Laughlin is articulate enough--he speaks slowly, ponderously, and often pauses dramatically, as if struggling to pick just the right Deep Thoughts in response to Serious Questions--and even pronounces a French word or two properly. But soon it becomes obvious that his views on IP are just a mess, and he is, indeed, infected by the scientistic virus that physicists are susceptible to.

To go along with Frank's excellent piece today, we have (Who else?) Paul Krugman -- excuse me, Nobel Laureat Paul Krugman -- declaring that we are in a "liquidity trap" and that the only way out is for the government to spend money that it does not have.

The Newly-Anointed One (not to be confused with the "Anointed One" who will be elected president on Tuesday) declares:

... consumers are cutting back just as the U.S. economy has fallen into a liquidity trap -- a situation in which the Federal Reserve has lost its grip on the economy.

Some background: one of the high points of the semester, if you're a teacher of introductory macroeconomics, comes when you explain how individual virtue can be public vice, how attempts by consumers to do the right thing by saving more can leave everyone worse off. The point is that if consumers cut their spending, and nothing else takes the place of that spending, the economy will slide into a recession, reducing everyone's income.

In fact, consumers' income may actually fall more than their spending, so that their attempt to save more backfires -- a possibility known as the paradox of thrift.

The cure? It is (drum roll) Government Spending!!

For the fact is that we are in a liquidity trap right now: Fed policy has lost most of its traction. It's true that Ben Bernanke hasn't yet reduced interest rates all the way to zero, as the Japanese did in the 1990s. But it's hard to believe that cutting the federal funds rate from 1 percent to nothing would have much positive effect on the economy. In particular, the financial crisis has made Fed policy largely irrelevant for much of the private sector: The Fed has been steadily cutting away, yet mortgage rates and the interest rates many businesses pay are higher than they were early this year.

The capitulation of the American consumer, then, is coming at a particularly bad time. But it's no use whining. What we need is a policy response.

The ongoing efforts to bail out the financial system, even if they work, won't do more than slightly mitigate the problem. Maybe some consumers will be able to keep their credit cards, but as we've seen, Americans were overextended even before banks started cutting them off.

No, what the economy needs now is something to take the place of retrenching consumers. That means a major fiscal stimulus. And this time the stimulus should take the form of actual government spending rather than rebate checks that consumers probably wouldn't spend.

The one fear that Krugman has, not surprisingly, is that the "free market" Bush administration will block this action:

Let's hope, then, that Congress gets to work on a package to rescue the economy as soon as the election is behind us. And let's also hope that the lame-duck Bush administration doesn't get in the way.

There is one fallacy after another in this column, and I wish I had the time to debunk all of them, but Henry Hazlitt beat me to it nearly 50 years ago, with his classic The Failure of the New Economics. It is time to give this great volume another look.

The mixing of politics and business not only is detrimental to politics, as is frequently observed, wrote Ludwig von Mises in 1926, but even much more so to business. Many large enterprises must give thousands of considerations to political matters, which plants the seeds of bureaucratism. But all this does not justify the proposals to bureaucratize completely and formally all production through the nationalization of credit. FULL ARTICLE